T Bills At Vanguard

[billybe]

I purchased 20,000 worth of T bills on Vanguard for the first time. These were $99.63 When it matured, $72.33 was swept into the settlement fund. Is this correct? I thought these were in the 4 percent range. Thanks for the help

[Geologist]

You didn't say how long the maturity was on these T Bills. Keep in mind that interest rates like "4%" are annualized.

Given the roundoff of your price (99.63; T-bills have prices to many more decimal places), then $72.33 seems about right for $20,000 at maturity.

[birdbard]

how many weeks was the maturity?

[watchnerd]

I purchased 20,000 worth of T bills on Vanguard for the first time. These were $99.63 When it matured, $72.33 was swept into the settlement fund. Is this correct? I thought these were in the 4 percent range. Thanks for the help

What maturity?

[chaser]

You should have gotten back a total of $20,000 on maturity. But Vanguard may be breaking up your money into principle and interest which will create 2 entries.

Quick math:
$20,000 means you bought 20 $1000 T-bills.
At $99.63 (which uses $100 as the par value), one $1000 T-Bill cost you $996.30.
$996.30 * 20 =$19,926.00 = $19,926 is what you paid for $20,000 worth of T-bills.
So your interest earned would be $20,000 - $19,926 = $74.00.

So $74 is close to $72.33, but still off. Maybe there is a rounding missing digit in your $99.63 price?

Reversing the math:
$20,000 - $72.33 = $19,927.67
$19927.67 / 20 = $996.3835
$996.3835 / 10 = $99.63835

So with the truncated digits, this math can check off.

[billybe]

It was one month.

[watchnerd]

It was one month.

You weren't expecting 4% annualized (i.e. $800) of return on a 4 week T-bill, were you?

[billybe]

Thanks for the understanding and education! You guys are the best.

[Abe]

There is a T-Bill calculator here:

https://www.fncalculator.com/financialc ... Calculator

Edit: This is what the calculator shows based on your information above.

Face Value: 20,000.00
Price Paid: 19,927.67
Total Profit: 72.33
Percentage Return: 0.36%
Annual Return Rate: 4.73%

[#Cruncher]

I purchased 20,000 worth of T bills ... When it matured, $72.33 was swept into the settlement fund. Is this correct? I thought these were in the 4 percent range.

It was one month.

It looks like you purchased 4-week bills at the 10/24/2024 auction. The auction results PDF shows these had a price of 99.638333 and a corresponding investment rate of 4.732%. Rows 8 and 11 below show how these can be calculated off the 4.650% discount rate (row 5) determined by the auction.

Code: Select all

Row            Col A       Col B   Formula in Column B
  2       Face value      20,000
  3           Issued  10/29/2024
  4          Matures  11/26/2024
  5        High Rate      4.650%
  6     Days in term          28  =B4-B3
  7     Days in year         365  =EDATE(B3,12)-B3 [*]
  8            Price   99.638333  =100*ROUND(1-B5*(B6/360),8)
  9             Cost   19,927.67  =B2*(B8/100)
 10           Profit       72.33  =B2-B9
 11  Investment Rate      4.732%  =(B10/B9)*(B7/B6)

* Formula with the EDATE function in cell B7 determines whether there are 365 or 366 days in the year following the issue date.